US stocks fell sharply on Friday as renewed fears around artificial intelligence-driven disruption, a stronger-than-expected inflation reading and rising geopolitical tensions weighed on investor sentiment.
The S&P 500 declined 0.8%, heading toward what could be only its second losing month in the past 10. The Dow Jones Industrial Average dropped 569 points, or 1.2%, while the Nasdaq Composite fell 1.2% in early trade, AP reported.
Markets were unsettled by a report showing US wholesale inflation at 2.9% last month, significantly above economists’ expectations of 1.6%. The stronger reading raised concerns that the Federal Reserve may delay interest rate cuts. Lower rates typically support economic growth and asset prices but can also risk stoking inflation.
The data added to a broader selloff in companies perceived to be vulnerable to AI disruption. Investors have increasingly targeted software firms and other businesses seen as potential losers in the AI revolution.
Block, the company behind Cash App and Square, provided a stark example. CEO Jack Dorsey announced plans to cut nearly half its workforce — more than 4,000 jobs from a staff of over 10,000 — despite rising profits and increased share buybacks.
“Intelligence tools have changed what it means to build and run a company,” Dorsey said in a letter to shareholders. “We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better.”
He added, “I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”
Block’s shares surged nearly 20% following the announcement.
Even AI beneficiaries faced pressure. Nvidia fell 2.6%, extending losses from the previous session despite reporting better-than-expected profit and projecting higher revenue for the current quarter. Broadcom also dropped 2.6%, while other chipmakers declined similarly.
Investors are questioning whether major AI spenders such as Amazon and Alphabet can generate sufficient returns to justify their multi-billion-dollar investments.
Salesforce fell 4.4%, surrendering gains from the previous day despite posting stronger-than-expected profit.
Among gainers, Netflix rose 8.6% after withdrawing from its bid to acquire Warner Bros. Discovery’s studio and streaming business, clearing the way for Skydance-owned Paramount to pursue a takeover. Paramount Skydance shares climbed 2.2%, while Warner Bros. Discovery slipped 1.9%.
In the bond market, the yield on the 10-year Treasury stood at 3.97%, rising after the inflation report but still below Thursday’s 4.02%.
Energy markets saw sharp moves amid geopolitical tensions. US benchmark crude oil rose 3.2% to $67.27 per barrel, while Brent crude gained 3.1% to $73.04. Concerns over escalating tensions between the United States and Iran have heightened fears that any conflict could disrupt global oil supplies.
Markets in Europe and Asia were mixed. South Korea’s Kospi fell 1% from a recent record high, while Hong Kong’s Hang Seng advanced 0.9%.
